It is easy to get confused with so many terms used in syndications that the actual profit potential can be somewhat misunderstood.

A standard return profile for a Real Estate syndication in a value-add multifamily project aims to 2x (double) investor’s money in a 3-5 year period.


If you invest $50,000 into a deal, you will end up with $100,000 by the end of the project. This is accounting for cash flow, profit upon the sale, and the return of your initial investment.


Let’s assume that you invest $50,000 into 1 deal and you keep rolling the profits and initial investment into new deals.


This is a potential scenario:

Initial investment amount: $50,000

Year 0 = $50K                            →     Year 5 = $100,000

Year 5 = Re-invest $100K          →     Year 10 = $200,000

Year 10 = Re-invest $200K        →     Year 15 = $400,000

Year 15 = Re-invest $400K         →     Year 20 = $800,000

Year 20 = Re-invest $800K         →    Year 25 = $1,600,000

Year 25 = Re-invest $1,600,000  →   Year 30 = $3,200,000

You could potentially turn $50K into $3,200,000!


All without ever investing any more capital into your investments!


Imagine what would happen if every year you were adding another $25K – $50K into your Real Estate investments?


Now, there are a few things to consider such as taxes and some investments not performing as expected:


Everyone’s tax situations are different, so I can’t account for how that would play into your own investments.

BUT- A person could utilize their retirement account to grow their wealth tax free.

An investor could roll over their profits into a new deal using a 1031 Exchange and avoid taxes.

Will an investment ALWAYS generate a 2x multiple in 5 years? Probably not. Some may be less, some may be more.


Our operators have done deals where they do 1.6x return on investor’s money in 2 years. Some others have done 2x multiple in 2 years!


A 1.6x multiple on your money is probably less than expected, but if it is done in 2 years, that’s a heck of a lot greater return than a 2x multiple in 5 years!



It’s possible you might invest in a deal that went the full 5 years, and instead of delivering a 2x multiple maybe you received a 1.3x multiple. Not the best, but hey, not bad if that’s a BAD deal.



Investing as a whole is risky, but there is one thing that differentiates Real Estate from all other types of investments and that’s the level of risk relative to the potential return.



For all my pilot friends, I can use aviation to relate to this:


Flying can be risky, but the risk is mitigated by gaining experience (flight time), avoiding bad weather conditions, utilizing checklists, reviewing any potential hazards during taxi, take off, cruise, and landing. All these things put together bring the risk level down and increase the probability of a successful flight.

Same with Real Estate – we partner with experienced operators who have been doing this for many years. We account for all the worst case scenarios and mitigate potential risks. We pick only the best locations to buy Real Estate. We pick the best properties. We account for extra reserves in capital. All these things put together greatly reduce risk and increase the likelihood of a high return for our investors.



If you want to find out more about how Real Estate syndications work, how to vet an operator, and how to tell what’s a good deal, then download my FREE eBook here.



If you are ready to get started passively investing in Real Estate, we still have a few open spots in our current deal, schedule a call to find out more about it.

Satch Bernhardt

CEO, V1 Capital



Investing term of the week: Preferred Return

Most syndications will have a preferred return between 6-8%.

This just means that passive investors (Limited Partners) will be paid first their preferred return before any profit splits are given to the General Partners.

Sometimes deals are not able to distribute the full preferred return due to a lack of cash flow. So if the deal only cash flows 4% in year 1, then the remainder to complete the preferred return gets accrued and is paid out as soon as cash flow is enough or when the property sells.

2 Responses

  1. Would investing the money into a trust after generating the wealth be tax beneficial in the long term for my son (3)? We are strongly contemplating investing in upcoming offers as savings accounts are useless.

    1. Hey Zach, I would say that sounds like a good strategy. I would encourage you to seek legal and financial advise to do it the right way, but definitely sounds like a good way to set your son up for success.

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